Human Capital Management Software: Best-of-Breed or Unified Platform?

“Should we invest in best-of-breed applications or a unified HCM platform?”

We still get that question often, and the answer is the same as it was ten years ago -- it depends…

Most talent management platforms of the first decade of this century grew up around a single application. Some, like SuccessFactors and Halogen, started with performance management. Others began as learning management systems. Taleo got its start in recruiting and became the industry leader in that niche. Payroll services providers expanded into time and attendance, workforce management, and eventually, talent management.

The choice at that time was between the headache of managing many separate systems or implementing a system with one or two strengths and many weaknesses, but that has changed.

Workday’s Cloud Disruption

Workday shocked the enterprise software market in 2006 when the company launched finance and human capital management on the same cloud platform ^[1]. The focus was, and still is, on the user experience. Workday usability set a new, higher standard in enterprise software.

The resulting competitive pressure and the trend toward cloud applications drove ERP vendors to invest in human capital management in the cloud. SAP acquired SuccessFactors, Infor acquired Lawson, Oracle acquired Taleo, and IBM acquired Kenexa – and these are only a few of the mergers and acquisitions over the past ten years.

Human Capital Management Software Has Matured

What these investments did was provide the capital for cloud vendors to speed up their development and round out their offerings. Now, as vendors develop new capabilities, the usual time from launch to full maturity is about 1½ to 2 years. For example, a “skinny” application at launch in 2014, Workday Recruiting is now a full-featured talent acquisition platform.

Many vendors in human capital management, but not all, now have capable applications in most talent management functions. According to Josh Bersin, ERP providers are now “credible, effective providers of comprehensive talent management technologies,” and they are providing a user experience on a par with consumer applications.^[2]

Thousands of software vendors provide services in human capital management. At the high end, the trend is toward unified platforms, but most vendors are single-application niche providers. Of the suite vendors, none has a dominant market share.

The Road map to the Right Decision

The state of the market demonstrates to us that there is no one “best” solution. The path to finding the right mix for your business starts not in the marketplace, but in a rigorous assessment of your company’s current and future needs.

• First, evaluate the alignment of your organization’s purpose and strategy. Assess how the strategic goals support the fulfillment of the company’s purpose.
• Evaluate how you need to shape the workforce to support the strategic plan. Do you need to strengthen the talent pipeline? Is leadership development a priority? Do you need to up-skill the workforce?
• Map your current processes. Identify strengths, weaknesses, pain points and disconnects. Identify the technologies needed to support the process and map the connections.
• Assess each existing technology platform and how well it supports your workforce strategy. Does your recruiting application support a robust talent pipeline? Does learning management engage your people and encourage them to develop the right skills? Is Payroll running smoothly, and does it integrate well with HCM and Finance?

This analysis should give you a clear idea of what is working well and where you need to improve.

Traditionally, human capital management has been in functional silos, and we are glad to see organizations modernizing and thinking more in terms of an employee lifecycle approach.^[3] Recruiting, onboarding, learning and development, goal management, and performance management are all part of the process that takes an individual from a recruiting prospect to a skilled employee. The applications that support, nurture, develop, and engage employees need to be a seamless experience for all the people who use them.

We advise leaders approaching a software decision to consider both the present and future. Explore the range of applications and how each one can address your current and future needs.

• Evaluate vendors’ product roadmaps to understand what their future capabilities will be.
• We recommend a unified talent management platform, but if you have existing core HR applications and are satisfied with their performance, see how vendors can support integrations. There is no need to rip out everything and start over.
• Consider a phased implementation, adding new capabilities over time. Let each one stabilize before you move on to the next.

If your organization is like most, the right solution will be a mix of unified technologies and best of breed applications. Here is a quick comparison of features and challenges to help you get to the right technology strategy:

We hope we have helped you move toward making the right decision, and at least assisted you in asking the right questions. If you have a question for us, use the comment section below to leave a message.

References :

[1]. Workday Inc.

[2]. "Ten Top Disruptive HR Technology-related Trends Highlight a Wave of Innovation Focused on Engaging Employees." Bersin by Deloitte. October 19, 2015.

[3].  "Webcast: "Why 'People Teams' Are the New HR." Human Capital Institute. May 23, 2016. 

Phenomecloud is a full-service technology company dedicated to helping clients solve business problems, improve the capability of their people, and achieve better results.